Sunnova Energy International Inc. filed petitions for Chapter 11 in the United States Bankruptcy Court for the Southern District of Texas with the intention of selling certain assets and business operations.
This follows the Chapter 11 filing of its subsidiary, Sunnova TEP Developer, a residential solar and energy storage developer.
The court approved First Day Motions, which enable it to continue operations. The company said in a statement that it will continue to manage its customers’ solar and energy storage systems “in the ordinary course of business at this time.” Sunnova plans to “communicate directly with customers regarding any material changes that may impact the service and support provided by Sunnova.”
Sunnova is seeking the highest “or otherwise best bid,” in the court-supervised sale process it expect to take approximately 45 days.
“Today’s actions mark a critical step towards securing a value-maximizing outcome for Sunnova’s stakeholders,” said Paul Mathews, chief executive officer of Sunnova. “Throughout this process, maintaining continuity of service for our customers is our top priority as we work to secure a long-term solution for our business operations under new ownership. I’m incredibly grateful to our dedicated Sunnova team for their hard work and commitment. We have built an innovative power provider, and I continue to believe deeply in the future of our industry and the promise of residential solar and storage.”
In addition, Sunnova has entered into an asset purchase agreement and settlement agreement with global investment firm Atlas SP Partners and solar power purchase agreement with home builder Lennar Homes, LLC.
Sunnova forged a relationship with the homebuilder in 2021 when it acquired Lennar’s residential solar platform, known as “SunStreet.” As part of the deal, Sunnova became the residential solar and storage service provider for Lennar’s new home communities that offer solar. Upon Court approval, Lennar will acquire certain assets related to Sunnova’s New Homes business unit for aggregate consideration of approximately $16.0 million.
Sunnova has also entered into an asset purchase agreement between Sunnova Energy Corporation, Sunnova TEP Developer, Sunnova TEP Holdings, and Sunnova TEP Holdings Subsidiary under which the statement says “certain solar systems and rights and customer agreements related to them, will be sold to TEPH Subsidiary, with $15.0 million to be paid from proceeds borrowed under TEP Holdings’ existing warehouse credit facility.
The company said it will use the funds, as well as “cash-on-hand,” to support core business operations during the initial period of the chapter 11 sale process. During this process, Sunnova intends to attempt to secure additional capital.
The customary First Day Motions were granted by the court to facilitate a smooth transition into chapter 11, providing the company the ability to continue certain business operations during the chapter 11 process. These include requests for approval to continue to pay employee wages and benefits, maintain customer programs and service, and honor post-petition obligations to its commercial partners,
Sunnova reports it has also secured interim relief to continue to uphold and honor loan agreements, power purchase agreements, service agreements, warranties, and more throughout the chapter 11 process.
Find more details on Sunnova’s Chapter 11 process here and restructuring details here. Stakeholders with questions can contact the Company’s claims agent, Kroll, by calling (888) 975-5436 (U.S. and Canada toll free) or +1 (646) 930-4686 (International) or emailing.
In addition to the court filing, Sunnova (NOVA) will be delisted from the New York Stock Exchange (NYSE), with trading suspended immediately.
Downturn
Sunnova has been in a downturn for more than a year, and announced it was laying off 15% of its workforce in February 2024. Three months ago the company’s future was in question following the company’s fourth quarter earnings and announcement that its cash flow was not sufficient to meet obligations and fund operations.
A week later its CEO stepped down and Paul Mathews was named new president and CEO. Soon thereafter, Oaktree Capital Management, a global investment firm, bought roughly $400 million of Sunnova’s $8.5 billion in debt .
The latest blow came when the Department of Energy (DOE) reportedly terminated a $3 billion loan guarantee awarded to Sunnova Energy, a residential energy-as-a-service provider. The partial loan guarantee agreement made by the DOE’s Loan Programs Office in September 2023 was intended to support loans originated by Sunnova under its Project Hestia.
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